Solicitors in Scotland | Specialists in Dispute Resolution

ARTICLES & UPDATES

Under Pressure: Natural
Justice in Adjudication

Under Pressure: Natural Justice in Adjudication

May 8, 2017

Introduction
Adjudication is a ‘fast track’ dispute resolution procedure, which has legislative backing for the Construction sector; and forms a central tool to facilitate cash-flow for its stakeholders. Like all adjudicative processes, the Adjudication process must satisfy the requirements of Natural Justice. The core of those requirements is procedural fairness.

The decision of Lord Tyre in Bell Building Projects Limited v Arnold Clark Automobiles Limited on 29 March 2017, highlights that Natural Justice is not the preserve of the parties to an Adjudication. The parties themselves must co-operate with the adjudicator, to facilitate his timeous decision. They must each be fair to him.

The Adjudication Process
Following the Adjudication decision of Lindy Patterson QC, that Arnold Clark had repudiated its contract with Bell, Bell referred a second Adjudication to Len Bunton on 30 September 2016, in which it claimed damages.

The Adjudication was complex. A large number of documents were submitted and the number of issues disputed was considerable. One matter in dispute was a claim by Arnold Clark for rectification works. Mr Bunton began scrutinising that claim on 14 November 2016, seven days before his decision was due. He proposed a discussion with the parties, on the principles to be applied. Bell suggested that Mr Bunton visit its offices, to verify that certain payments had been made from its records. In a conference call the next day, Mr Bunton proposed a meeting with the parties. A day later, Bell repeated its offer for Mr Bunton to visit its premises. Mr Bunton reiterated that he would do so, provided that a) the advisors of Arnold Clark were given the opportunity to be present; and b) he would be given more time for his decision, to accommodate the visit. Otherwise, he could not proceed with the visit and would, instead, reach his decision on the papers he had, with clarification of some remaining issues in writing. Bell insisted upon the premises visit and offered times for another conference call. Mr Bunton declined, re-affirming his direction.

Arnold Clark (directly, rather than through its solicitors) attacked Mr Bunton for “building [Bell’s] case for them” and having already made up his mind.

In the course of correspondence which ensued, Bell stated that because Arnold Clark would not attend at the visit (such that it could not go ahead), Bell would instead lodge further documents. Between 7:30pm and 9:30pm on Friday 18 November 2016, further documents were indeed delivered by courier to Mr Bunton; and an unsuccessful attempt was made to deliver copies to the offices of Arnold Clark’s solicitors.

Arnold Clark called for the further documents to be rejected, because they had been produced so close to the deadline for the decision (the following Monday). Mr Bunton refused. He accepted the further documents and commented that the late lodging had been caused by Arnold Clark’s refusal to participate in the proposed premises visit. He was only looking at the further documents by way of cross-check. Arnold Clark continued to object, arguing unfairness.

As he had done over the weekend, Mr Bunton repeatedly asked for more time for his decision, on the Monday (being the day it was due). He threatened to resign if this was not agreed to. Arnold Clark did not agree. Mr Bunton did not resign. He timeously issued his decision, which generally favoured Bell and rejected Arnold Clarks claim for rectification works.

Challenge
Bell raised enforcement proceedings in the Court of Session. Arnold Clark predictably resisted. It maintained its contention that the process was unfair. Natural Justice had been breached materially.

Decision
Lord Tyre granted judgement in favour of Bell, refusing Arnold Clark’s challenge. He observed that the restricted period within which the adjudicator must issue his decision, may necessarily result in the parties being given “very short times” to respond to requests for information and/or documents.

In determining whether Natural Justice had been breached, Lord Tyre took into account that Arnold Clark’s prevention of the visit to Bell’s premises (by refusing to participate in it) was unreasonable. There was no injustice, actual or possible, caused by Arnold Clark not receiving the further documents issued by Bell, by courier on the Friday evening. A factor was that, as he had noted, Mr Bunton would be considering the documents to a limited extent and only by way of validation. The day allowed for Arnold Clark to comment on the electronic copies of the further documents was reasonable. Arnold Clark chose not to comment. Moreover, it chose not to give Mr Bunton further time. It could not now claim unfairness.

Lord Tyre also noted that it was Arnold Clark’s responsibility to properly vouch its claim for rectification works. It did not need to be given a further opportunity to do so. In any event, Arnold Clark was given that opportunity and Mr Bunton had sought further time, such that the opportunity could be extended. Arnold Clark had itself said, during the Adjudication process, that no further vouching was needed. It refused to agree to further time. Mr Bunton’s rejection of the rectification claim did not breach Natural Justice in the circumstances.

Adjudication is a rough and ready process. Given the size of the Adjudicator’s task, last minute questions, which need answered quickly, are a highly likely part of the process. Matters dealt with towards the end of the process are likely to be in the nature of vouching, following considerations of merit. The swift and summary nature of adjudication must take precedence over Natural Justice.

Comment
In 1993, Sir Michael Latham undertook a review of procurement and contractual arrangements in the Construction sector. The final report was produced in July 1994. Latham recommended adjudication as a speedy dispute resolution process in the construction sector. He also recommended that a specific duty be required of all parties to deal fairly with each other, in an atmosphere of mutual trust and co-operation.

As have the noted facts of previous judgments relative to Adjudication, the facts of this case evidence just how hard the parties to an Adjudication and their representatives must work, to meet the requests of the Adjudicator. It is usual that, for the period of the Adjudication process, the parties and their representatives will live and breathe the dispute.

However, it is perhaps the Adjudicator who is under the most pressure. For he must reach a decision within the time limit of the Adjudication process, otherwise his decision will be invalid and he may not be paid for the work he has done.

Of course, things can go wrong. Natural Justice can be breached. Jurisdiction can be exceeded. And where these are material there is rightfully a point when an Adjudicator should resign, or a particular decision should not be upheld. In that regard parties can reserve their position for later review.

Parties and their representatives must recognise that Adjudicators are committed to their task and want to succeed. Taking a combative approach is rarely helpful. Rather, all parties ought to see a common interest in the achievement of a robust decision to resolve their dispute. If the Adjudicator requires more time, unless that would cause real prejudice to either party, then more time should be given. It is to everyone’s advantage that they act in the spirit of mutual trust and co-operation, as envisioned by Latham. That way, some of the pressure on the Adjudicator and indeed on the parties, may be released. And at the weekends they can live and breathe fresh air.